CHICAGO—Allowing foreign airlines to operate domestic routes in Mexico would not lower fares as advocates of cabotage in the country claim, a top Aeromexico official said.
Mexican President Andrés Manuel López Obrador has previously suggested the country could “solve” high domestic airfares by allowing cabotage, specifically pointing to European and U.S. airlines as being good candidates to operate routes within Mexico.
Speaking March 23 at the Routes Americas 2023 conference in Chicago, Aeromexico Airport Affairs Director Abelardo Muñoz Martín pushed back against the notion that foreign competition would bring fares down and disputed the suggestion that fares are excessively high to begin with.
“The reason the president is pushing this is that there is a misconception that airfares are high and that competition will lead to lower fares, but it's completely the opposite,” he said. “Because foreign carriers would operate the highest-demand routes and not the low-demand ones.”
That means fares would remain high on the underserved routes President López Obrador says he is most concerned about, Martín said, and major domestic routes would see fares at the same levels after a possible initial drop as demand continues to increase.
The Aeromexico executive also pointed to a lack of clarity about how cabotage in Mexico would work. “It's not clear if [foreign airlines would] have to create a new company based in Mexico or they just put a fleet of airplanes in Mexico and start operating domestic routes,” Martín said.
He added that foreign airlines may not be eager to enter the Mexican market because “regulations in other countries are more friendly to airlines than they are in Mexico.”
President López Obrador is also pushing the creation of a state-owned airline to offer low fares on underserved routes. The government has indicated the airline would be called "Mexicana."
“We're not afraid of competition,” Martín said. “We believe in our product and that we are best at what we do in Mexico. It's unclear if there will be subsidies to this 'Mexicana' airline and how they will operate and if they can provide proper maintenance to the aircraft.”
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